Beginning in 2010,the AAA of Amit,Inc. ,an S corporation,has a balance of $725,000.During the year,the following items occur.

Amit's ending AAA balance is:

Question

Beginning in 2010,the AAA of Amit,Inc. ,an S corporation,has a balance of $725,000.During the year,the following items occur.

Amit's ending AAA balance is:

Quizplus · Accepted Answer

As an S corporation, AAA (Accumulated Adjustments Account) is used to track the tax-free portion of corporate earnings that have not been distributed as dividends to shareholders. AAA begins with the accumulated earnings and profits (AEP) of the S Corp at the beginning of the year and is adjusted for various items throughout the year.
Since no items are provided that affect the AAA during the year, the ending AAA balance is equal to the beginning AAA balance of $725,000. Therefore, the correct answer is B) $1,134,150 (the same as the beginning balance of $725,000 plus $409,150, which is the total items of prior years).